SPK - Spark NZ

[Breezy]

Divie likely to be 25 cents 75% imputed

That's a huge pay cut from 38.2 cents gross F24 ...16% less

Depends what tax rate you are on and whether you can fully utilize the imps, id say most older holders of this stock can't so the 75% will make little difference.

[BlackPeter]

Take of woe and misery       

First profit downgrade this year


https://announcements.nzx.com/attachment/430676.pdf 

Oh dear - wondering what this will do to the SP?

On the other hand - they said they are updating their downgrade ... nice choice of words ...

Didn't balance on the other channel used to say these things normally come in threes? But then, even balance is not always right.

Trend chart looks inspirational (well, for shorters, this is):





You cannot view this attachment.

[Breezy]

Looks like a perfect buying opportunity to me just like CNU all those years ago when I was drastically wrong, just don't have the money to do so unfortunately.

[entrep]

With the MSCI index selling to come too.

[BlackPeter]

No matter what people read into this "update" - it definitely is a worthwhile candidate for nomination as "masterpiece of corporate speak".

Here are some amazing gems:

" increased price erosion at contract resigning and aggressive competitive pricing activity."

" However, in IT products the mix shift between private and public cloud has accelerated, impacting margins."

" We recognise that we have a lot of work ahead of us to win back the confidence of our shareholders ..."


No doubt - the future they describe looks gloomy ; Are they pitching for a vampire audience ...?

[BlackPeter]

Looks like a perfect buying opportunity to me just like CNU all those years ago when I was drastically wrong, just don't have the money to do so unfortunately.

Might be lucky - hey, it could turn out to be an ATM instead?

[winner (n)]

Might be lucky - hey, it could turn out to be an ATM instead?

Thst be good ..ATM up 40% from recent lows

[Breezy]

Thst be good ..ATM up 40% from recent lows

And bang on my 2 yr tp of around $4.20ish.

[BlackPeter]

Thst be good ..ATM up 40% from recent lows

True ... their SP first dropped by 80% (down from a stellar nearly $22), and then it went 40% from the bottom up again (to something like $6.50).

Not the best strategy to make money, if I may say so ... unless you short on the way down and hold on the way up.

Note: Spark currently appears to be on the way down ...

[LoungeLizard]

Market has reacted sensibly - or perhaps not over-reacted -  as the SP had priced in Armageddon anyway. SP up 6c atm. Revised dividend forecast as expected and not a game changer - 25c on a SP of $3 is a good return whilst they reset the business. Selling of 17% stake in Connexa will help pay down debt and perhaps at these SP levels, another share buyback might be on the cards. I don't see the SP going down much below $3, regardless of the MSCI index machinations to come. This over-selling has been partly manufactured and will be corrected in due course imo.

[Breezy]

Market has reacted sensibly - or perhaps not over-reacted -  as the SP had priced in Armageddon anyway. SP up 6c atm. Revised dividend forecast as expected and not a game changer - 25c on a SP of $3 is a good return whilst they reset the business. Selling of 17% stake in Connexa will help pay down debt and perhaps at these SP levels, another share buyback might be on the cards. I don't see the SP going down much below $3, regardless of the MSCI index machinations to come. This over-selling has been partly manufactured and will be corrected in due course imo.

Yep Armageddon priced in already and as far as I'm aware that event is yet to occur.

[Breezy]

Avg tp of $4.05 over 9 analysts with an Outperform rating after latest downgrade, about right IMO and $4.20 my 2 yr tp estimate.

[seaweed]

Avg tp of $4.05 over 9 analysts with an Outperform rating after latest downgrade, about right IMO and $4.20 my 2 yr tp estimate.

I am getting 8.6% yld at $2.89c. ASB is giving me 5.67% interest so have decided to buy 5,000 to 10,000 more every time it drops 5c which is going against all the rules in don't buy in a down trend. When all the dust settles and all the shorters have gone and the MSCI finished selling then what. It will get so low then it can only go back up. Or is that too simple.     

[Breezy]

I am getting 8.6% yld at $2.89c. ASB is giving me 5.67% interest so have decided to buy 5,000 to 10,000 more every time it drops 5c which is going against all the rules in don't buy in a down trend. When all the dust settles and all the shorters have gone and the MSCI finished selling then what. It will get so low then it can only go back up. Or is that too simple.     

Yep get that done and dusted and with interest rates continuing to fall punters will be looking for yield. Rather buy this than fully priced stocks like IFT/SUM/HLG and the like.

[BlackPeter]

I am getting 8.6% yld at $2.89c. ASB is giving me 5.67% interest so have decided to buy 5,000 to 10,000 more every time it drops 5c which is going against all the rules in don't buy in a down trend. When all the dust settles and all the shorters have gone and the MSCI finished selling then what. It will get so low then it can only go back up. Or is that too simple.   

It appears that whoever is selling (and it appears many do) is making different working assumptions about the stocks future earnings potential than you are. Whether they will be right or whether you are - this jury is still out. Sure - it could be a case of brainless index funds having to sell ... but given that these index funds are just followers, somebody with a brain must have started.

Anyway - apart from that you might want to rethink the validity of your statement : "It will get so low then it can only go back up"

While it is correct, that most stocks bounce somewhat back after such a spectacular down leg (its just physics), there is absolutely no guarantee that this "somewhat" will be higher then your purchase price on the way down ... and yes, sadly, I can think as well about some stocks which didn't bounce back at all - i.e. they may or may not bounce back.

From a personal point of view, I don't expect them to roll up their toe nails anytime soon, but I see them as a quite mediocre "me too" in a market with increasing competition, fast dropping margins and short investment cycles. They still need to drop a bit to even reach some acceptable value based on their earnings .. and are based on their earnings value in my view likely to drop some further, to give them afterwards some upwards momentum.

While I am sometimes as well buying stocks in a downtrend (yes, I know - don't look at my fingers ), I never do this when the stock price is still above a sensible assumption of their earnings value. Bargepole scenario.

Anyway - good luck - what could possibly go wrong?